On May 19, 2016, the Competition Bureau (Bureau) announced that
it has launched a market study into technology led innovation in
the Canadian financial services industry (FinTech); FinTech was
identified as a subject matter of interest at the Bureau's
workshop on emerging competition issues held in January 2016.
The study raises important considerations not only for FinTech
companies, but for the financial services industry broadly.
Focusing on interactions between consumers and small and
medium-sized businesses and financial services, the study will
consider innovations in peer-to-peer banking, mobile wallets and
payments, crowd-funding and online-based financial advisory
services. While the market study's scope is subject to change,
the Bureau does not intend to consider the implications of
blockchain technology for the financial services sector, nor will
it consider an extensive list of other topics, including currencies
and crypto-currencies such as Bitcoin, insurance, payday loans,
loyalty programs or deposit taking.
Absent any express statutory mandate, the Bureau has indicated
that the study aims to answer the following key questions:
What has been the impact of technology‑led innovation on
the competitive landscape? What is happening to competition? How
will innovation impact competition in the future?
How will consumers benefit from FinTech?
Are the consumer protections in place today enough to adapt for
the future? What additional protections should be put in place for
consumers? Is there a need for greater transparency in fees?
What are the barriers to entry, expansion, or adoption for
FinTech companies? Are they regulatory or structural?
What is the current state of the regulatory framework for
financial services? Does it support or inhibit competition and
innovation? Are changes required to encourage greater competition
and innovation in the sector?
What issues should be considered when developing or amending
regulations to ensure competition is not unnecessarily
Past experience and Bureau commentary, notably references to
recent reports that FinTech adoption in Canada has lagged other
jurisdictions, suggest that the study's focus will be on
regulatory or structural barriers or hindrances to the emergence of
competition from FinTech companies or the adoption of FinTech by
existing financial services companies.
The FinTech market study reflects the Commissioner of
Competition John Pecman's belief in the Bureau's role as a
competition advocate, and is another example of the Bureau's
focus on the role of innovation and its effects on competition,
particularly in regulated industries. In that respect, the current
focus of the market study parallels some of the Bureau's recent
focus on the appropriate scope of regulation for ride sharing
services. The study raises important considerations for both
FinTech companies and the financial services industry; for example,
will the Bureau recommend — as it did regarding ride sharing
services — that regulations be relaxed for existing industry
participants while simultaneously being extended to the FinTech
sector? What will be the nature of the Bureau's advocacy in
this regard — what levels of government and which regulators
will any Bureau advocacy extend to?
Given the broad scope of the financial services sector, and its
importance to consumers and for the Canadian economy, it will be
interesting to see how the Bureau achieves a balance between
protecting consumers, promoting innovation, and ensuring a
"level playing field" for all participants in the
financial services industry.
The Bureau is inviting interested stakeholders to file
submissions and/or indicate whether they wish to participate in the
market study by June 30, 2016. The market study's results will
be published in the spring of 2017.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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